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Math  /  Algebra

Questionurrent Attempt in Progress During its first year of operations, Mona Corporation had these transactions pertaining to its common stock.
Jan. 10 Issued 30,000 shares for cash at $5\$ 5 per share. July 1 Issued 60,000 shares for cash at $7\$ 7 per share. (a) Journalize the transactions, assuming that the common stock has a par value of $5\$ 5 per share. (b) Journalize the transactions, assuming that the common stock is no-par with a stated value of $1\$ 1 per share.

Studdy Solution

STEP 1

1. Mona Corporation is issuing common stock.
2. There are two transactions involving the issuance of shares.
3. The common stock has a par value of \$5 per share in part (a).
4. The common stock is no-par with a stated value of \$1 per share in part (b).
5. We need to journalize the transactions for both scenarios.

STEP 2

1. Journalize the transactions for common stock with a par value.
2. Journalize the transactions for common stock with a no-par stated value.

STEP 3

Journalize the transaction on January 10 for common stock with a par value of \$5 per share.
- Calculate the total cash received: 30,000 shares×$5/share=$150,000 30,000 \text{ shares} \times \$5/\text{share} = \$150,000 . - Record the cash received and the common stock issued at par value.
Journal Entry: \begin{align*} \text{Date: Jan. 10} & \\ \text{Debit: Cash} & \quad \$150,000 \\ \text{Credit: Common Stock} & \quad \$150,000 \\ \end{align*}

STEP 4

Journalize the transaction on July 1 for common stock with a par value of \$5 per share.
- Calculate the total cash received: 60,000 shares×$7/share=$420,000 60,000 \text{ shares} \times \$7/\text{share} = \$420,000 . - Calculate the par value of the shares issued: 60,000 shares×$5/share=$300,000 60,000 \text{ shares} \times \$5/\text{share} = \$300,000 . - Calculate the additional paid-in capital: $420,000−$300,000=$120,000 \$420,000 - \$300,000 = \$120,000 .
Journal Entry: \begin{align*} \text{Date: July 1} & \\ \text{Debit: Cash} & \quad \$420,000 \\ \text{Credit: Common Stock} & \quad \$300,000 \\ \text{Credit: Additional Paid-in Capital} & \quad \$120,000 \\ \end{align*}

STEP 5

Journalize the transaction on January 10 for common stock with a no-par stated value of \$1 per share.
- Calculate the total cash received: 30,000 shares×$5/share=$150,000 30,000 \text{ shares} \times \$5/\text{share} = \$150,000 . - Calculate the stated value of the shares issued: 30,000 shares×$1/share=$30,000 30,000 \text{ shares} \times \$1/\text{share} = \$30,000 . - Calculate the additional paid-in capital: $150,000−$30,000=$120,000 \$150,000 - \$30,000 = \$120,000 .
Journal Entry: \begin{align*} \text{Date: Jan. 10} & \\ \text{Debit: Cash} & \quad \$150,000 \\ \text{Credit: Common Stock} & \quad \$30,000 \\ \text{Credit: Additional Paid-in Capital} & \quad \$120,000 \\ \end{align*}

STEP 6

Journalize the transaction on July 1 for common stock with a no-par stated value of \$1 per share.
- Calculate the total cash received: 60,000 shares×$7/share=$420,000 60,000 \text{ shares} \times \$7/\text{share} = \$420,000 . - Calculate the stated value of the shares issued: 60,000 shares×$1/share=$60,000 60,000 \text{ shares} \times \$1/\text{share} = \$60,000 . - Calculate the additional paid-in capital: $420,000−$60,000=$360,000 \$420,000 - \$60,000 = \$360,000 .
Journal Entry: \begin{align*} \text{Date: July 1} & \\ \text{Debit: Cash} & \quad \$420,000 \\ \text{Credit: Common Stock} & \quad \$60,000 \\ \text{Credit: Additional Paid-in Capital} & \quad \$360,000 \\ \end{align*}

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